Fonterra And Nestlé Realign Latin American Venture

Fonterra and Nestlé
have realigned their 10-year old Dairy Partners Americas
(DPA) 50/50 joint venture and signed binding agreements
covering the revised scope of the alliance.

Under
the agreements:

• Fonterra will take a 51
per cent controlling stake in DPA Brazil, with Nestlé
holding the balance;• Fonterra together with a
local partner will acquire Nestlé’s share of DPA
Venezuela;• Fonterra will sell its share in
DPA’s milk powder manufacturing business to
Nestlé;• Nestlé will buy Fonterra’s share
in DPA Ecuador.

Fonterra’s CEO, Theo Spierings,
says the DPA joint venture has performed well for ten years
and now the time is right to realign the partnership to
better reflect the respective strategies of Nestlé and
Fonterra in the region.

He says the revised alliance
supports Fonterra’s group strategic focus on everyday
nutrition in key growth markets such as Latin America, China
and Indonesia.

“We value our relationship with
Nestlé and this high-quality agreement will see our
successful alliance continue.“The deal also enables
the Co-operative to drive more long-term value in the region
for its farmer shareholders,” he says.

Fonterra’s Managing Director of Latin America, Alex
Turnbull, says: “The region’s economies have undergone
considerable change during the past 10 years. We’ve seen
increased prosperity in markets like Brazil with rapidurban
growth and a focus on healthy nutrition driving demand for
dairy products.

“A bigger stake in DPA Brazil
means we will be well placed to drive our volume and value
growth strategy focusing on everyday nutrition
offerings.”

Fonterra’s Latin American footprint
drives more than 900,000 metric tonnes of volume per year
and $3.5 billion (NZD) in revenue from consumer dairy,
foodservice and dairy ingredients.

“We are very proud
with what we’ve achieved through the DPA joint venture
with Nestlé and are looking forward to continuing to work
together with renewed focus,” says Mr Turnbull.

The changes to the joint venture are subject to
regulatory approval. As a consequence of the
realignment,Fonterra expects to receive about $96 million
(NZD) in the next financial year.

About
Dairy Partners AmericasSet
up in 2003, Dairy Partners Americas is the largest dairy
company in South America, purchasing and processing more
than two billion litres of milk each year in Brazil alone.
DPA produces ingredients and consumer products with strong
brands in the liquid and chilled dairy market throughout
Latin America.

Fonterra licenses brands and provides
its large-scale milk procurement, product development, and
manufacturing and processing expertise, as well as technical
services and certain technology to the alliance.

Nestlé licenses brands and provides its product
development, manufacturing and processing expertise, as well
as distribution infrastructure to the alliance.

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